The lenders did not disclose the reasons cited by the central bank (Representational)
Mumbai:
India’s central bank has asked South Indian Bank and Federal Bank to stop adding new customers to their co-branded credit cards, the lenders said in separate stock exchange filings on Wednesday.
South Indian Bank said it has been asked to stop on-boarding any fresh customers in its co-branded credit cards until it complies with regulatory guidelines. It will continue servicing existing customers, it said.
Federal Bank said it has been asked to halt the issuance of new co-branded credit cards by the Reserve Bank of India (RBI).
“The Bank is in the process of rectifying the areas that are deficient and will seek regulatory clearance prior to resumption of new issuance,” Federal Bank said.
The lenders did not disclose the reasons cited by the central bank but said the directive follows a recent change in rules for credit and debit cards.
As part of those rules, the RBI reiterated that co-branding partners of credit cards cannot access customer data or be involved in any of the processes after the initial issuance of the cards.
The banks, in their filings to the exchanges, did not specify whether the restrictions placed on them were due to a breach of this provision or another condition.
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